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WorksheetsSaving, Investment and the Financial System
Total questions: 10
Worksheet time: 5mins
What is the primary function of the financial system ini the economy?
Regulating currency exchange rates
Channeling funds from Savers to borrowers
Determining the price of goods and services
Controlling government spending
what is meant by "saving" in macro economics?
money lent by the government
Money spentspent for consumption
income not consumed by households and the government
purchased of stocks and bonds by companies
which of the following characteristic of bonds are considered higher risk?
Short term
inflation protection
high credit risk ( high probability of default)
issued by the US government
Mutual funds offer advantages because:
They provide portfolio diversification for investors with small capital.
They guarantee a 100% return on investment.
They do not charge management fees.
They only purchase shares from one large company.
The loanable funds market seeks equilibrium between:
Government revenue and spending
Total debt and bad debt
Supply of funds from savers and demand from borrowers
Stock and bond prices
How do tax incentives for savings affect the loanable funds market?
Shift the supply curve to the left
Shift the supply curve to the right
Reduce the amount of savings that people save
Shift the supply curve to the left
The purpose of government-provided investment credit is to:
Reduce public savings
Increase demand for loanable funds
Lower fixed interest rates
Increase corporate taxes
A government budget deficit has all of the following effects except:
Reduces national saving
Increases real interest rates
Increases private investment
Crowds out private investment
The role of banks that distinguishes them from other financial institutions is:
Purchasing company shares
Distributing long-term loans
Acting as a medium of exchange through checks and debit cards
Managing pension funds
The crowding-out effect means:
The government restricts private investment
The government increases savings
Government deficits raise interest rates and reduce private investment
The government reduces debt
